Comparing Payday Loans To Personal Loans By Martin Sumner Payday loans have, in many people's eyes, a reputation as being an expensive form of credit. It's certainly true that the imposition of a flat fee of 10% to 25% of the loan amount works out to be a very high APR when you take into account the short term nature of the loan, and although taking out a payday loan may actually work out to be cheaper than some other forms of such as long term credit card debt, the interest rate will still be much, much higher than that of a personal loan. So why do people take out payday loans if they're so costly?
The first reason is simply speed. Many people resort to a wage advance when they literally don't have any money left at the end of the month, and yet have bills to pay and food to buy. A payday loan can be arranged on the same day you apply, with the cash in your
account the next day. A personal loan simply can't compare to this - there will be complex forms to fill in, credit agreements to sign and return, credit checks to be carried out... the list goes on. When you need quick cash, a payday loan might well be the only answer.
Another advantage of these loans is the fact that you can borrow only a small amount if that is what you want, just enough to see you through your current cash flow problem. Most personal loans have a much higher minimum amount you need to borrow, and if you don't need that much then you're saddling yourself with unnecessary and unwanted debt.
A related point is that the repayment term of a payday loan is, by its very nature, a lot shorter. While the APR rate on a personal loan might appear to be much lower, by spreading the repayments over a longer term you may well end up paying more in interest overall. The combination of having to borrow a larger amount over a longer period is certain to cost more in the long run than taking out an advance of just the amount you need over as short a time frame as possible.
The final reason is that because of the way payday loans work, they're very easy to be approved for. People with all kinds of credit ratings are likely to have their applications accepted, which is certainly not the case with other forms of finance.
No personal expert would recommend taking out a payday loan lightly, especially if you get into the situation of having to renew the loan every month, but taking the above advantages into consideration it's easy to see why sometimes payday advances can actually be a perfectly prudent way of bridging a temporary financial gap.
Instant Decision Personal Loans Direct! By Kirthy V A personal loan with instant decision can be made yours….wondering how? Online instant decision personal loans offers quick cash to tenants without any asset to back up their loan. Is it too hard to Read more...
Unsecured Loans For Tenants - Reorganising Your Finances By Andy Silk Finance can be very confusing sometimes. Even for the professionals in the world of loans and mortgages, there are so many choices and each lending product has its own set of criteria and they can Read more...
The Real Cost Of Cash Advance By Roberto Bell One of the most expensive loans in the financial market is Cash Advance, a cash loan obtained against your credit card's account balance by means of which you can withdraw money from an ATM, bank, or Read more...
finance Definition
The functions of the Bank of Japan and other banks, securities companies and post offices, and a look at emerging services and the influence of liberalization.
Helpful Information On Mortgages By James Copper-5768 The first thing you'll want to do before you start looking at the various mortgages and mortgage lenders available is understand what a mortgage is, how the process works and who takes part. Read more...
]]>Federal Reserve 401(k) Dodges Stock Market Meltdown With Stable-Value Products, Author Finds Barry J. Dyke, author of The Pirates of Manhattan found that the majority of employee assets in the huge $4.5 billion Federal Reserve System 401(k) dodged most of the stock market meltdown by having a majority of its assets invested in stable-value life insurance products. (PRWEB Dec 2, 2008)
]]>Jamaica Real Estate Is The New Safe Haven For US Stock Market Investors American investors are venturing abroad to buy Jamaica property as a lower cost option yielding an annual rate of return of more than 10% and providing steady rental income. With Eastern Europe and Asian markets collapsing under the weight of the credit crisis, the unscathed Caribbean islands have become a very attractive investment location especially in Jamaica real estate. (PRWEB Dec 2, 2008)
